Frequently Asked Questions (FAQs)

How Does Our Company Work?

  • While good deals can be found on popular real estate websites like Zillow and Redfin, we are predominantly focused on finding ‘off-market’ deals. This is done through our network of real estate agents, brokers, and wholesalers. Furthermore, we are constantly sending letters directly to property owners to find off-market opportunities.

  • This is HIGHLY variable depending on the project objective. We could be looking for cash flow, growth potential, forced appreciation opportunities, or portfolio diversification, to name just a few things.

    With that in mind, we are generally looking for undervalued properties in markets we like. These properties ideally will also have an obvious opportunity to add value through construction/development.

    For more specific answers, please talk to us directly!

  • Typically, we raise money from investors using either Rule 506(b) or 506(c) under Regulation D of the Securities Act.

  • Typically, our investors do not have an active role in our projects, but rather just receive passive income and quarterly statements. This makes investing as easy as possible for all of our investors.

  • Investment timeline varies from project to project, with some being shorter and others longer. Investors receive regular income distributions throughout the year, however, our typical investment window is 4-8 years.

  • As defined by the SEC, an accredited investor has a net worth greater than $1 million (excluding their primary residence) OR income greater than $200,000/year as an individual, or $300,000/year with a partner/spouse.

    Some of our projects require accredited investors, and others do not.

What Are The Different Types of Real Estate Investments?

  • Cash Flow = Passive Income

    In a cash flow market, you are looking to maximize the amount of cash a property generates based upon the initial investment (also known as ‘cash-on-cash return’).

    Typical Examples:

    -Multi-family Properties (i.e., Duplexes/Triplexes etc.)

    -Apartment Complexes

    -Commercial Real Estate

    -Out of State Markets

  • While some investors look for cash flow/passive income, others are looking for more growth/appreciation of the underlying asset. This can be advantageous as taxes aren’t paid on these gains until the eventual sale of the asset.

    Typical Examples:

    -Single Family/Residential Properties

    -Speculative/Desirable Locations

    -California

    FORCED APPRECIATION: Returns can also be magnified by FORCING appreciation by purchasing a distressed property and renovating it.

    Example: Our San Luis Obispo Project

    -Value Before Renovation: $750,000

    -Renovation Cost: $175,000

    -Value After Renovation: $1,050,000

    -Forced Appreciation: $125,000

  • Hybrid markets/properties provide significant opportunities for both CASH FLOW and APPRECIATION/GROWTH. However, there are trade-offs when pursuing this type of investment model.

    Examples:

    Single Family Homes with INCREASED cash flow via:

    -Short-Term/Vacation Rental

    -Board & Care

    -College Rental

Why Do We Like College Rentals?

  • We can increase cash flow by renting a property out by the bedroom (instead of the property as a whole).

    For example, a family in San Luis Obispo, California might be willing to pay $4,000/month for a 4 bedroom house, whereas 4-6 students might be willing to pay $6,000-7,000/month for the same house.

    There are disadvantages to this investment strategy as well, which you can see below.

  • Our financial risk is mitigated by having good guarantors (typically the student’s parents) also sign the lease. Furthermore, each individual guarantor is fully-responsible for the entire lease.

  • While some may view a high tenant turnover rate as a hassle, we actually prefer it in a state (i.e., California) with very strict rent control laws. The high turnover rate allows us to keep rents current, as well reduce the accumulation of wear on the property by being able to repair it between tenants.

  • While big companies move all of the time, universities act as permanent economic hubs for a region. Furthermore, universities are constantly expanding to accommodate more students, thereby increasing housing demand.

  • In general, students are willing to be quite flexible with their living situations as long as they have some privacy, and can stay with their group of friends. This means properties can be modified with garage conversions and ADU additions to accommodate additional students.

    Additionally, they typically leave for the summer. So if the property makes sense, we can turn it into an AirBNB/short-term rental for the summer, and then a student rental during the academic year.

  • While there are many advantages of college student rentals, there are also some of the following disadvantages:

    -Potentially higher maintenance costs due to increased wear & tear on property.

    -High tenant turnover rates leads to more property management work.

    -Neighbor noise complaints (although we have historically not had an issue with this one!).